Oh, I should mention the radiator is brand new, Nissins. Brand new as in 4 years old, but just sat with coolant in it for that time. The thermostat though, I guess is my next thought, it's strange you can hold onto the metal tube that the lower hose attaches too and it's not remotely warm. But you touch the other side of the thermostat housing and it's very hot, or is that normal?

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1983 W123 300TD US spec Turbo engine, with Euro bumpers and manual climate control, and manual transmission.